Chapter 414 – Speaking with facts!
This meeting was very weird. No one wants to say anything first. Zhang Ruiqiang had no choice but to call out names. The first person was someone he arranged.
It was Bing City’s new Deputy Mayor. He was also the lowest ranking Deputy Mayor. But his opinions outweigh most of the rest as last month, he was still the Provincial Mayor’s personal secretary!
“I had just been transferred over to Bing City, but I am familiar with this city. Restructuring of state-owned enterprises has been happening all over the country now. Our Bing City is one of the forerunners in China, and the higher-ups were pleased with our restructuring results over the past few years. Who was the one that had led these restructuring? It is Mayor Zhang. Among all of us here, no one is more experienced than him when it comes to restructuring. I had read through the information carefully. I am not sure if the rest had noticed one thing. Most of the pharmaceutical factories are producing the same medicines. This means that we are competing among ourselves. Also, the resources and energy are too diversified, and this is not good if we were to compete with pharmaceutical companies from other provinces. If we can merge all these factories and companies into a corporation, we can pool our resources together and increases our competitiveness. This is the reason why I support Mayor Zhang’s proposal!”
Those that wanted to object this proposal starts to hesitate. This was the Provincial number 1’s secretary. Are his views in line with the Provincial number? If the Provincial number 1 supports this proposal and they object, they will be going against him. Will there still be promotions for them? Will they be transferred to the backend like Deputy Mayor Xu?
After that, the rest of the deputies started to express their views. They did not say that they support or reject this proposal. They also expressed their concerns. All of them felt that this merger was a good thing, but it could not be implemented. This should be put off for a later date.
When it was the Executive Deputy Mayor’s turn to talk, he strongly objects to this proposal.
“There are 31 factories, which are not restructured, under our Pharmaceutical Administration office. If we add in those restructured factories, there will be 43 factories. How much effort is required if we were to merge all these companies into a corporation? If we are going on with this proposal, then this will be the city government main focus. Maybe one month is not sufficient even when all of us here focuses all our efforts on this merger! Furthermore, some individuals and foreign investors have shares in some of those factories. How will we go about implementing this merger?”
The Executive Deputy Mayor was pleased when he noticed everybody listening to him tentatively. He was groomed by the Provincial Number 2. He had very different views from Zhang Ruiqiang. He felt that it should be those loss-making factories that need to be restructured. Those that were doing well should carry on. If this proposal fails, then those factories that were doing well will also be affected. There were some precedents of this happening.
“Even if we were to merge all these factories and the restructuring process were proceeding smoothly, but what about the money? After the merger, we will have to pool the resources, and we have to let go of those toxic assets. Some people will have to let go, and some factories will have to be close down. The City must have the funds to take care of these issues. This will not be a small sum. It will be at least over 10 million. Based on the information given, we are still going to expand. This will also not be a small figure. If the City were to fund this, then what would happen to the other projects? Just building the urban construction needs a lot of funds. Where will the City Government get the money?”
“That’s why I think this cannot be implemented. Those factories’ leaders should think of a way to make their factories profitable themselves. They cannot depend on the government all the time. Since they are the ones in that position, then they have to take on the responsibility!”
After the Executive Deputy Mayor had finished talking, he drank his tea before turning to Zhang Ruiqiang. He wants to see how Zhang Ruiqiang answers his questions.”
Zhang Ruiqiang nodded: “Deputy Mayor Li had finished. Ministry of Health representative, tell us your views.”
The Representative from the Ministry of Health thought for a while and said: “We do not object to this proposal, but the Pharmaceutical Administration Office is the one overseeing this. We can only assist them.”
This sentence was obviously shifting the responsibility to others. But others could not say anything. Those factories were indeed registered under the Pharmaceutical Administration office.
Chief Qian of the Pharmaceutical Administration Office saw Zhang Ruiqiang looking at him and start to express his thoughts: “I am very familiar with these factories. I have also studied pharmaceutical factories in other provinces. Many of those provinces had merged those small factories together, forming a more powerful company which could compete with the rest of the big players. If we want to step out of Longjiang province, then the merger will be our only option. As for those factories where there were other shareholders, we can negotiate with them. They can convert their shares to the new company’s shares, or we can buy over their shares.”
“Ridiculous! Where do you get the money from?” The Executive Deputy Mayor retorted.
“We can look for investors. The City Government does not need to come up with a single cent.” Chief Qian replied. The Mayor had spoken to him before this meeting, and of course, he will choose to support the Mayor. The Mayor had promised him that after restructuring, he will be the Chairman of this new corporation!
“Get investors? Just like the Machinery Company? Giving the government assets to those businessmen?” The Executive Deputy Mayor sarcastically replied.
At this moment, everybody understands why Wu Zhigang was attending this meeting. The investor should be Tai Hua Trading!
Wu Zhigang suddenly said: “Deputy Mayor Li, I do not agree with what you said! What do you mean by giving the government assets to businessmen?”
“Isn’t this the truth? The Machinery Company was invested by your company for development. But now, how many shares do the city have in that company? Who is holding on to the majority shares?”
“Deputy Mayor Li, I have a set of data here. I am representing my boss to show all of you these figures. Before the Machinery Company was restructured, its best annual profit was less than 6 million RMB. The taxes it paid was never more than 1 million RMB, and the Machinery Company was worth only about 30 million RMB. Now, the city owns 28% shares of the Machinery Company, and the value of these shares are worth more than 300 million RMB! Last year, the Machinery Company’s profit was more than 100 million. Based on the shares, the city will get more than 30 million RMB of the profits. Also, the taxes paid by the Machinery Company was more than 17 million. Do you still have doubts about whether the city had gain or loss from this?” Wu Zhigang replied.
This was also what Feng Yu taught him over the phone. This was called speaking with facts!
By disclosing all these figures was to prevent these people from thinking that Feng Yu had taken advantage of the City. If it weren’t for Feng Yu, even when the Machinery Company was growing, at most, the Machinery Company would only be valued at 50 million RMB. How much will be the profits and how much tax will this company pay? Most likely, the Machinery Company would be making losses.
Although the city does not hold the majority of the shares, the city was making more than the previous few years. This was also the reason why the higher-ups felt that this restructuring was a success.
“That is the Machinery Company. Pharmaceutical companies are not the same. Can you guarantee that after restructuring, this corporation will make so many profits?” Deputy Mayor Li argued.
Wu Zhigang looked at everybody and loudly said: “Our boss had said, he can do it!”